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Low Income Home Energy Assistance Program skip to primary page contentassistance with heating and cooling costs

Allocation Formulas

This web page describes how federal LIHEAP block grant funds are distributed to state LIHEAP grantees. It does not describe how such funds are distributed to Indian tribes/tribal organizations and the insular areas. It also does not describe how LIHEAP emergency contingency funds and LIHEAP leveraging incentive funds are distributed.

There are two federal formulas for allocating LIHEAP block grant funds to the 50 States and the District of Columbia. The original or "old "formula distributes LIHEAP block grants when the Federal LIHEAP block grant appropriation is at or below is $1.975 billion. It is based on the FY 1981 allocation formula percentages developed for the Low Income Energy Assistance Program (LIEAP). The revised or "new" formula distributes LIHEAP block grant funds when the federal LIHEAP block grant appropriation is above $1.975 billion.

FY 1981 LIEAP Allocation Formula

The allotment of LIEAP grants for the 50 States and the District of Columbia was specified in the continuing resolution (Public Law 96-369 and Public Law 96-536) to follow allocation procedures in House Report 96-1244 to House Resolution 7998. The allotment formulas included factors related to home energy expenditures, low-income population estimates, and climate expressed as heating degree days, as described below. However, $50,000,000 was reserved to make up the difference between the amount of a State's allotment under those procedures and 75% of the amount the State could have received under section 306 of the Crude Oil Windfall Profits Tax Act.

The first continuing resolution for FY 1981 (Public Law 96-369) directed that allotment of funds among the States be determined by a sequence of calculations. First, each State's allotment was to be calculated under alternatives set out in House Report 96-1244 to House Resolution 7998.

Alternative A

  • 1/2 based on the increase in home heating expenditures
  • 1/2 based on heating degree days squared times population with income equal to or less than 125% of the poverty income guidelines

Alternative B

  • 1/4 based on total residential energy expenditures
  • 3/4 based on heating degree days squared times the number of households with incomes equal to or less than the Bureau of Labor Statistics' lower living standard income level

Each State's percentage of the available total funds was calculated according to each alternative. The greater of the alternative percentage for each State was assigned to that State in a table. Totaling each States' percentage in that table summed to more than 100 percent, and each State's percentage than was reduced proportionately and converted to an amount of dollars, based on the total available. That dollar amount was compared to each State's allotment under HHS' FY 1980 Energy Assistance Program, and a total was created of the greater amounts for each State. Since the total of the table exceeded the available amount, each State's amount again was reduced proportionately. Finally, the resulting amount for each State was compared to 75 percent of the greater amount each State could receive from funds available under formulas in section 306 of the Crude Oil Windfall Profits Tax Act of 1980. Where 75 percent of the amount from section 306 was greater, the State's allotment amount was set at that greater amount. In those instances, the difference between the section 306 amount and what the State otherwise would have received was drawn from $50 million reserved by Public Law 96-369 for that purpose alone.

HHS allotted funds to the States in accordance with the requirements of the appropriating statues including reserves for direct grants to Indian tribes/tribal organizations and reallocation procedures. Consequently, the FY 1981 LIEAP allocation formula resulted in an allotment ratio or percentage for each State-- see the FY 1981 allotment ratio for each State.

Original LIHEAP Allocation Formula ("Old" Formula)

The LIHEAP statute (title XXVI of Public Law 97-35, the Omnibus Budget Reconciliation Act of 1981) specified the allotment of LIHEAP grants as:
the percentage which the amount the State was eligible to receive for fiscal year 1981 under the allotment formulas of the Home Energy Assistance Act of 1980 bears to the total amount available for allotment under such formulas.

Accordingly, each State received the same percentage of available funds in FY 1982 through FY 1984 as it had received for FY 1981. As described above, the FY 1981 allotment percentages were derived from an extremely complex formula that included such factors as heating degree days squared, home heating expenditures, total residential energy expenditures, number of households with income equal to or less than the Bureau of Labor Statistics' lower living standard income level, and the population with income equal to or less than 125 percent of the poverty income guidelines. The formula also included several complex provisions requiring alternative percentage calculations and necessary pro rata reductions so that total percentages would not exceed 100 percent.

Except for FY 1985, FY 1985, and FY 2006, the distribution of LIHEAP block grant funds has been based on the allocation formula that was in effect for FY 1981 for the LIEAP block grants to the States.

Revised LIHEAP Allocation Formula ("New" Formula)

In amending the LIHEAP statute (title XXVI of Public Law 97-35, the Omnibus Budget Reconciliation Act of 1981), the Human Services Reauthorization Act (HSRA) of 1984 (Public Law 98-558) revised the formula for distributing LIHEAP funds to States. FY 1985 marked the first year of distributing LIHEAP funds to States under the revised formula as established by HSRA. Section 2604(a)(2) of Public Law 97-35, as amended by Public Law 98-558, specifies that a State's allotment percentage of LIHEAP funds available to States for FY 1985 and thereafter is "the percentage which expenditures for home energy by low-income households that State bears to such expenditures in all States. . . ."

There were several amendments to the LIHEAP statute when the program was reauthorized in FY 1984. The reauthorization provided, beginning in FY 1985, a change to the existing formula (or "old formula") which distributed LIHEAP block grant funds among the States. The revised formula (or "new" formula) distributed LIHEAP block grant funds according to "each States' share of expenditures by low income households for home energy." The new formula has been implemented three times--FY 1985, FY 1986, and FY 2006. The new formula can only be implemented when LIHEAP block grant appropriations are above $1.975 billion in a given year.

Data Sources

The new formula relies on various sources of data to derive the estimated amount of expenditures used in a normal year for each heating and cooling fuel by low income households by State. The following data sources and factors were used in deriving the estimated amount of expenditures for FY 2001:

  1. Energy Price Projections for the Residential Sector in Nominal Dollars per Million Btu, 1997, by fuel source, by State.

    Source: State Energy Price and Expenditure Report (SEPER), U.S. Energy Information Administration, Combined State Energy Data System, 1997.
  2. Residential Energy Consumption, Billion BTUs, by fuel source.

    Source: State Energy Data Report (SEDR) U.S. Energy Information Administration, Combined State Energy Data System, 1997 -- for coal, LPG, and wood.

    Source: U.S. Energy Information Administration, Combined State Energy Data System (preliminary figures) 1999 -- for electricity, fuel oil, kerosene, and natural gas.
  3. Heating Degree Days (HDDs), Cooling Degree Days (CDDs), weighted population by State; 30-year normal HDDs and CDDs.

    Source: Historical Climatology Series, 5-1 and 5-2, NOAA's National Climatic Data Center, calendar year 1999.
  4. Number of total heaters, low income heaters, by State, by fuel source, number of all households, total low income households, by State.

    Source: 1990 Decennial Census, sample run for the U.S. Administration for Children and Families.
  5. Heating and % cooling, LOTOALL, wood estimates, and multi-unit housing data.

    Source: Residential Energy Consumption Survey (RECS) 1997, tables numbered 4, 5, 16, 17,18 and 19; Wood--tables I and III.

A rather complex and wide-ranging database was developed to determine these State allocation percentages. The database is available below in the section, Downloadable Files, in an Excel spreadsheet which is updated annually with the most current data available. The database spans over 70 columns in the spreadsheet. A description of the columns is available below in the section, Downloadable Files.

Special Provisions

Under the new formula, no State is to receive less than it would have received in FY 1984 at a funding level of $1.975 billion. This is known as the new formula's "hold-harmless" provision, which is described below in the section, Downloadable Files, using an appropriation level of $2.1 billion. This hold-harmless provision is implemented after the final State allocation percentages are determined in the new formula database.

Congress ensured that no State would lose too great a share of its previously anticipated funding under the revised allocation formula. The following features were provided:

  1. Congress provided the "hold-harmless" provision which guaranteed to each State a minimum amount, commonly referred to as a "statutory floor." A distribution of LIHEAP funds based entirely on each State's share of home energy expenditures by low income households would have resulted in relatively large decreases compared to FY 1984 for some States, and relatively large increases for others. To protect States from sudden large decreases, the HSRA provided that, for FY 1985, when the LIHEAP appropriation was $2.1 billion, no State would receive less than it did in FY 1984, when the LIHEAP appropriation was $2.075 billion. In accordance with this provision, the FY 1985 allocations for 25 States were increased from the amounts they would otherwise have received to their "statutory floor" amounts.
  2. The second feature of the revised formula for allocating LIHEAP funds is commonly referred to as the "give back" provision. Funds necessary to raise States to their statutory minimums, as described in the previous paragraph, were obtained by reducing the allotments of States which otherwise would have received the greatest increase in their allotments above the statutory floor by virtue of the revised formula. In FY 1985, States that received increases under the new formula had their increases limited to about 3 percent of their allotments, as compared to FY 1984, in order to provide the funds necessary to bring other States to their guaranteed minimum amounts. In accordance with these procedures, FY 1985 allocations were reduced for 25 States over the amounts they would otherwise have received.
  3. A third feature takes effect if the appropriation level is at least $2.25 billion in any fiscal year. If so, a State whose allotment percentage would be less than 1 percent would not have its allotment percentage reduced from the percentage it would receive from a total appropriation of $2.14 billion. Since the appropriation in FY 1985 (and each subsequent year) was less than $2.25 billion, this feature was not operative.

As a result of these features, the revised formula distributed funds according to each State's share of expenditures by low income households for home energy (defined in section 2602(3) of the LIHEAP statute to mean a source of residential heating or cooling), then reduced the proportional increases which some States received (in comparison to their previous shares) to redistribute enough funds to ensure that no State fell below certain levels.

An example of calculating the hold-harmless provision is available below in the section, Downloadable Files.

Calculation of State Block Grant Allotments

Once the estimates of each State's share of expenditures were determined, the calculation of State allotments proceeded in three steps:

  1. HHS calculated a State's percentage by dividing the home energy expenditures of low income households in the State by such expenditures in all States. The percentage then was multiplied by the amount available for State grants.
  2. HHS increased any State allotments necessary to provide each State with at least the amount of funds it received in FY 1984, i.e., its statutory floor (under hold harmless).
  3. To obtain funds necessary to increase States' allotments to the statutory floor, HHS reduced the allotments of those States experiencing increases in funding over FY 1984. The amount of increase was limited by the amount necessary to fund the States as described in the second step.

The distribution of funds in FY 1986 followed most of the same statutory guidelines as FY 1985, marking the second year under the new allocation formula. Under the "hold-harmless" provision, however, the "statutory floor" decreased in FY 1986. In FY 1986 and thereafter, no State is to receive less than it did under the previous formula when the LIHEAP appropriation was $1.975 billion.

Downloadable Files

Below are several downloadable Microsoft Word and Excel files that deal with the new allocation formula. These files should be used together to gain a complete understanding of the process to implement the new formula if LIHEAP block grant appropriations go above $1.975 billion. (*See Note below the last file.)

  • New LIHEAP Allocation Formula Database as of 12/06/05 (XLS 137KB)*
  • Description of LIHEAP Allocation Formula Columns (DOC 56KB)
  • Further Explanation of Hold-Harmless Provision (DOC 26KB)*
  • Examples of Calculating Hold-Harmless Provision at Various Funding Levels(XLS 177KB)*
*Note: The first file has been updated using data on primary heating fuels for low income households from the 2000 Decennial Census. The third file will be updated as it is based currently on primary heating fuels for low income households from the 1990 Decennial Census.